Competition Commission of India approves Tesco stake in Trent

Despite the commerce ministry rejecting foreign investment in India’s multi-brand retail,

the Competition Commission of India has approved British retail major Tesco's purchase of a 50 percent stake in Tata Group firm Trent Hypermarket. The joint venture partnership between Tesco and Trent is the first foreign direct investment transaction in multi-brand retail after the sector was opened up for investment in 2012.

On the first day of the new cabinet taking charge of various ministries under the Narendra Modi-led BJP government, the new Commerce and Industry Minister Nirmala Sitharaman had said that foreign investment in multi-brand retail sector may not be allowed fearing that it may have an adverse impact the small traders and farmers in the country. During its election campaign, the party in its manifesto had said that “barring the multi-brand retail sector, FDI will be allowed in sectors wherever needed for job and asset creation, infrastructure and acquisition of niche technology and specialised expertise.”

However, how the new government plans to deal with the approval already given to Tesco, when a Congress-led coalition was in power, remains to be seen. After the earlier UPA government allowed 51 percent FDI in multi-brand retail and left the final decision of allowing foreign retailers in a particular state to the government. Experts say that the new government should look at the policy with fresh perspective by finding a solution to the problems while welcoming investment in the sector.